32-bit programs can normally only use up to 2GB of system RAM. However, every program has a Large Address Aware (LAA) flag which, when set, allows a program to use more than 2GB of system memory. There are a number of LAA patchers available but this is the only one that has so far been found to not interfere with OBSE.

In 64-bit Operating Systems, programs with the LAA flag set automatically gain access to 4GB of memory. In 32-bot OSes, however, this flag has no effect unless the 3GB switch is set in the OS, in which case the program can access up to 3GB of RAM. However, 32-bit OSes can't effectively manage more than 2GB of RAM per program so using the 3GB switch is not recommended.

In addition, some programs show increased instability when the LAA flag on their application is changed. Fortunately, Oblivion is not one of those programs. However, there are only certain circumstances where Oblivion would benefit from having the LAA flag changed.

First, you have to use a 64-bit OS for the flag to have any effect.
Next, only heavily modified games will really benefit from more memory allocation.
Lastly, for people using a 64-bit version of Windows XP, it is highly recommended that you download Oblivion Stutter Remover then use a seperate memory heap manager and increase the value of iHeapSize in the OSR INI file to avoid performance issues. Users of 64-bit Vista and 7 don't have to do this step.